Israel’s UNRWA dilemma: who else will provide aid to the Palestinians?

If UNRWA is defunded, Israel doesn’t want to fill the breach, and Arab states will demand a roadmap to Palestinian statehood as a condition of their support.

One by one, a series of Western countries announced last week the cutting of funding to the UN agency for Palestinian refugees, UNRWA. Eight countries including Australia, the US, Canada, the UK, and Germany, said they would stop or pause hundreds of millions of dollars in pledges as they reevaluate the agency’s complicity in terrorism against Israelis. 

The decision followed an intelligence report submitted by Israel, in which it proved the involvement of at least 12 Gaza UNRWA employees in the terror attacks of October 7. Israel further argued that as many as 1,300 UNRWA employees, or 10% of its Gaza staff, had ties to Hamas.

The damning report, and its immediate aftermath, seemed to indicate a shift in Israeli policy toward UNRWA, established in 1949 to provide food, employment, and education to Palestinian refugees. After all, Israel had previously relied on the agency and its Western donors to maintain stability in the beleaguered Gaza Strip and West Bank, the latter still held by Israel under military occupation. But the defunding of UNRWA could spell its imminent collapse.

Removing UNRWA as the main aid provider to 1.6 million Palestinians registered in Gaza and 900,000 in the West Bank would place the burden of education, sanitation, and civil governance on Israel. But given Israel’s current security needs – including a demand by the military to increase its budget by 60 billion shekels a year ($A25 billion), effectively doubling it – the burden of administering the Palestinian Territories would prove impossible. Israel would have to find an alternative source of funding, and it would have to do so fast.